JPMorgan Lifts Macau Targets, Stocks Rally

By Ben Levisohn

The first three months of the year were so good for Macau’s casino stocks that analysts have had to adjust their models to account for the record breaking quarter. This time, it’s JPMorgan’s Joseph Greff and Jonathan Mohraz doing the adjusting. They write:

Lam Yik Fei/Bloomberg News

Based on recent Macau gross gaming revenue (GGR) releases and proprietary checks, we are truing up 1Q13 estimates for the Macau-centric stocks, LVS, MPEL, MGM, and WYNN. On average, we are upping our Macau 1Q13 property level EBITDA estimates by 6%, with LVS and MPEL 5% and 6% above current Consensus estimates.

Three stocks get higher price targets: Las Vegas Sands (LVS) goes to $65, from $64, while Melco Crown (MPEL) jumps to $29, from $24 and Wynn Resorts (WYNN) goes to $149, from $148. Only MGM’s (MGM) target remained unchanged, at $15.

Still, the analysts feel no need to adjust estimates for the remainder of this year or next (except in the case of Melco). They write:

For the most part (all but MPEL, which we are increasing), our 2Q13 – 2014 EBITDA estimates are unchanged, which we feel are reasonably based and have future upside potential. We rate each Overweight, with LVS and MPEL our top two picks, given their exposure to the higher growing and higher margins mass table segment, with WYNN and MGM right behind given each company’s reasonable growth expectations and growth associated with its 2016 Cotai projects.

Las Vegas Sands has advanced 1% to $55.50, Wynn Resorts has climbed 1.3% to $125.12, MGM Resorts International has risen1.8% to $12.87. Melco Crown Entertainment has jumped 1.8% to $23.23.

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